City Focus: GM's Wagoner rolls over critics

Animal welfare campaigners can rest easy. There are no cats in General Motors boss Rick Wagoner's household.

Under pressure: GM chief Rick Wagoner faces turbulent times

How on earth, I ask him, does he cope with the massive pressure and frustration of heading a car giant on the brink of collapse?

'We don't have any cats,' he said with a wry laugh. 'And that's probably just as well for them.'

I am speaking to him at arguably the most depressed, down-beat, yet most critical, Detroit Motor Show in history where the very survival of General Motors in particular, and the United States motor industry as a whole, is at stake.

Thousands of UK jobs at Vauxhall's Astra plant in Ellesmere Port and GM's van factory in Luton also depend on his decisions.

We meet on the very day that Motown - the legendary record label named after 'Motor Town or Mo-Town' of Detroit - is celebrating its 50th anniversary.

But the wheels are coming off as the real Motown goes into meltdown with GM's US sales alone slumping 23% in 2008 against a national industry average of 18%.

Nor was Wagoner fully convinced by the argument that what doesn't kill you makes you strong.

'I'd not recommend it as a course of action if you can avoid it,' he says. 'But you do learn. We have taken tough decisions. But they are not fun.

'You get up every day and you do your best. A lot of people count on us. It's going to be pretty tough.'

Folding his arms slightly defensively, he also admits: 'I like it better when I'm not criticised.

'It comes with the turf. It is an important job that we have to do. It continues to be a privilege to do the job. But I could have done without some of the coverage.'

Nor is he a quitter. Despite calls his resignation he insists: 'I'm staying. I'm not going anywhere.'

A naturally serious man, prone to sometimes sounding like a talking accounts ledger, this year he appeared noticeably more relaxed in himself - though anything but laid back.

Maybe it was the sheer 'what-the-hell' scale of the challenge confronting him that made everything else pale into insignificance. As Motown goes into meltdown, this year's Detroit Motor Show and GM's part in it, focused on austerity and survival.

There was no repeat of last year's lavish car-meets-fashion show with performances featuring a host of stars, including rock band Maroon 5 and singer Mary J Blige.

Instead, the company bussed in around 600 past and present workers bearing banners like Here To Stay to voice their support.

By contrast, outside the Cobo Hall where the show takes place, more militant banner-waving union protesters from the United Auto Workers were demonstrating against any job or wage cuts.

Wagoner, 56 next month, is a big man for a big job. His height - he is a towering 6ft 4ins - stood him in good stead as a college basketball player for the Blue Devils at Duke University in North Carolina - a couple more inches and he may even have turned pro.

As the head of one of America's 'Big Three' car-makers, he has endured in recent months the roughest ride of his life.

Wagoner was put through the wringer alongside his opposite numbers, Ford boss Alan Mulally and Chrysler chief Robert Nardelli, as they took their begging bowls to Washington DC and testified before the US Congress as to why they deserved a bailout.

He and his counter-parts were torn to shreds - pilloried by US senators for flying to the capital in executive jets, for their hefty fat-cat salaries, and for failing to come with a properly prepared plan.

Sent away with a flea in his ear, forced to eat a shop-load of humble pie, and ordered to dump the inappropriate executive jet and return to Washington by a more frugal car, the automotive Master of the Universe was more successful at the second attempt. How is life without the executive jet, having been bullied into abandoning it?

'I just get into the car and drive to Washington DC, I guess. It complicates things. It's harder to do. But we'll have to get used to it.'

He also uses commercial flights: 'I've done it for most of my life so it's not as dramatic as it sounds.'

He has stared into the abyss of Chapter 11 administration and admits it was, and remains a possibility. But he is confident they will fulfil the terms of the US government's rescue package. GM was hit by what its finance director Fritz Henderson called 'complete, total, utter collapse' and would have been forced to the wall had interim federal support not been forthcoming.

It was never their strategy to go there voluntarily, but might have been forced on them. GM laboured over its submission to Congress: 'I'd urge you to read it. Especially if you can't sleep at night.'

But it has now been pledged $13.4bn in government funding. It has until March 31 to complete a massive restructuring to fulfil the terms of the US government bail- out which demands that the company be 'viable' and with a 'positive net value.'

This involves securing a deal with reluctant unions to cut jobs and introduce more flexible working; negotiating with bondholders to significantly reduce debt levels; slimming down the dealer groups, and selling off or scrapping loss-making car brands.

Chevrolet and Cadillac will form the backbone of the restructured GM, with a question mark over Saturn and a downsizing of Pontiac. Wagoner says GM had enough funding to last through March but could still seek additional US government loans.

It borrowed $4bn on December 31 and is eligible for another $5.4bn on January 16 and a final $4bn loan installment on February 17.

The loan programme requires GM to cut its debt by two-thirds and to negotiate sweeping changes to its contract with the United Auto Workers Union so that it is more in line with work rules and wages in non-unionised plants run by Japanese car makers in the US, such as Toyota.

But unions are digging in their heels and objecting to the terms as unfair.

GM HAS set a goal of reducing its debt by almost $36bn by asking bond holders to swap out of existing debt for shares and by negotiating new terms for its promised $21bn contribution to a trust fund for retiree health care that will be run by the UAW.

'The market will not recover in 2009. It will be a tough time,' Wagoner says. It is in everyone's interest to have absolute clarity about where we are going. Our focus right now is to execute this plan by the March 31 deadline.'

Taxpayers, such as those in Britain, would be furious if cash for a bail-out in one country were siphoned off to bail-out factories in another. He said: 'Governments will want to ensure that we use the money for what we say it will be used for. They will look for commitment.'

Electric cars were the 'big thing' this year as GM showed off a stunning electric prototype of its Cadillac Converj.

General Motors has approached Gordon Brown and challenged the Prime Minister to put his money where his mouth is and back European production of their new electric Volt car at Ellesmere Port in Cheshire, and fulfil his ambition of making the UK 'the electric car capital of Europe'. GM has invested $1bn in the Volt set for US showrooms from 2010 and Wagoner says: 'The UK could be an option. I don't rule it out.'

Cynics suggest that the push on electric simply makes the right political noises to Washington.

Returning to the Motown theme, I ask what his favourite track is. 'I'm partial to the Four Tops,' he said.

Reach Out, I'll Be There, I venture, might be an appropriate track for the times.